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"Within a decade, we’ve seen ETFs grow to the point where investors now see them as a foundational investment vehicle. While this sentiment is particularly pronounced among Millennial investors, it is reflected strongly across generations and genders."

SAN FRANCISCO--(BUSINESS WIRE)--Exchange Traded Funds (ETFs) are the investment vehicle of choice for
91% of Millennial investors according to the ETF Investor Study by
Charles Schwab & Co., Inc. Millennials say 42% of their
portfolios are currently in ETFs, and more than half (56%) of investors
in that generation say they have already replaced all individual
securities in their portfolios with ETFs. Nearly 80% of Millennials see
ETFs as their primary investment vehicle in the future. Looking ahead,
nearly three quarters (74%) of Millennials surveyed expect to increase
their ETF investments in the next year and 54% say they would consider
placing their entire portfolio in ETFs in the same time frame.

ETF Sentiment

2017

2018

Say ETFs are investment vehicle of choice

All ETF Investors

N/A

72%

Millennials

N/A

91%

See ETFs as primary investment type in future

All ETF Investors

42%

55%

Millennials

63%

79%

ETF Holdings

2017

2018

% of portfolio already in ETFs

All ETF Investors

28%

34%

Millennials

36%

42%

Have replaced all individual securities in portfolio with ETFs

All ETF Investors

N/A

32%

Millennials

N/A

56%

ETF Behavior

2017

2018

Expect to increase ETF investments in next year

All ETF Investors

45%

54%

Millennials

60%

74%

Would consider placing their entire investment portfolio in ETFs in
next year (excluding cash holdings)

All ETF Investors

N/A

31%

Millennials

N/A

54%

“It is striking after eight years of conducting this study to see
investor appetite for ETFs still going strong,” said Heather Fischer,
Vice President, ETF & Mutual Fund Platforms at Schwab. “Within a decade,
we’ve seen ETFs grow to the point where investors now see them as a
foundational investment vehicle. While this sentiment is particularly
pronounced among Millennial investors, it is reflected strongly across
generations and genders.”

A deeper look: ETFs and the current market environment

The return of volatility to financial markets in 2018 has thus far not
dampened investor interest in ETFs – just the opposite. More than 80% of
all investors surveyed say they believe ETFs provide the flexibility
they need to react to short-term market swings, and more than two-thirds
(67%) say they expect to allocate more to ETFs during periods of market
volatility. Taking a generational view, Millennials report significantly
higher levels of activity and interest in ETFs during periods of market
volatility. Additionally, investors overall are more interested in
exploring smart beta ETFs during periods of market volatility (73%).

All ETF

Millennials

Gen X

Boomers

Matures

Investors

(age 25-37)

(age 38-53)

(age 54-72)

(age 73+)

Say that ETFs provide the flexibility needed to react to short-term
market swings

83%

95%

87%

73%

59%

Expect to allocate more to ETFs during periods of market volatility

67%

89%

79%

41%

28%

More interested in exploring smart beta ETFs during periods of
market volatility

73%

92%

81%

53%

33%

A deeper look: views by gender

Examining the results by gender revealed that more often than not, men
and women are closely aligned in their views about and adoption of ETFs.
Male and female investors report that about a third of their portfolios
are currently invested in ETFs and they plan to increase ETF investments
in the next year at about the same rate. Slightly more men (32%) than
women (29%) say they would consider placing their entire investment
portfolio (excluding cash holdings) in ETFs within the next year. But
over the next 10 years, women (56%) are somewhat more likely than men
(52%) to consider such a move.

Generational gender differences do exist, however. While 44% of
Millennial men describe themselves as experienced compared to 40% of
Millennial women, just 26% of all female investors consider themselves
experienced compared to 36% of male investors.

All ETF

Investors

Women

Men

Percent of portfolio currently invested in ETFs (on average)

34%

33%

34%

Expect to increase investments in ETFs in next year

54%

57%

54%

A deeper look: Technology fuels ETF growth

A quarter of investors are turning to automated investing platforms or
portfolio-building tools designed for self-directed investors to select
ETFs, with Millennials and women indicating they are early adopters of
these platforms compared to other groups. Just over a quarter of
investors rely on their advisors to select ETFs. Baby Boomers and mature
investors are much more likely to use an advisor than younger
generations, while women are somewhat more likely to work with an
advisor than men.

All ETF

Most of my ETFs are selected...

Investors

Millennials

Gen X

Boomers

Matures

...by an automated investing platform (e.g., robo-advisor)

8%

12%

11%

3%

3%

...using a portfolio-building tool designed for self-directed
investors

17%

26%

20%

7%

2%

...by an advisor

29%

22%

22%

36%

48%

...by myself

46%

40%

46%

52%

47%

Most of my ETFs are selected...

Men

Women

...by an automated investing platform (e.g., robo-advisor)

6%

11%

...using a portfolio-building tool designed for self-directed
investors

The 2018 ETF Investor Study by Schwab is the eighth installment
of an annual online survey of 1,500 individual investors between the
ages of 25-75 with at least $25,000 in investable assets who have
purchased ETFs in the past two years. Conducted by Koski Research from
April 28 – May 15, 2018, the study has approximately a three percent
margin of error. Survey respondents were not asked to indicate whether
they had accounts with Schwab. All data is self-reported by study
participants and is not verified or validated.

About Schwab

At Schwab, we believe in the power of investing to help individuals
create a better tomorrow. We have a history of challenging the status
quo in our industry, innovating in ways that benefit investors and the
advisors and employers who serve them, and championing our clients’
goals with passion and integrity.

Investment returns will fluctuate and are subject to market volatility,
so that an investor’s shares, when redeemed or sold, may be worth more
or less than their original cost. Unlike mutual funds, shares of ETFs
are not individually redeemable directly with the ETF. Shares of ETFs
are bought and sold at market price, which may be higher or lower than
the net asset value (NAV).